If the COVID-19 pandemic taught us anything, it’s that an emergency fund can come in clutch when the world turns upside down. With so many uncertainties surrounding our daily lives, having a little extra dough in the bank can offer a lot of peace of mind.
Even though we all agree that savings are important, the statistics don’t lie: A recent study found that 58% of millennials have less than $5,000 in savings. Not that $5k is anything to balk at, but with inflation at historically high rates, that number is being stretched pretty thin.
So how can you beat the odds and save up your first $10k?
It’s all about making a plan and following through – and we’ve got tips and strategies (and some Love is Blind 2 references) to help you along the way.
1. Set Your Goal
We love a good, specific goal. It’s easy to say “I want to save money.” It’s more difficult to pinpoint an exact number and lay out a timeline for when you want to reach it.
So how much savings should you shoot for? Well, if you’re starting off with little to nothing, a great place to start is $10,000 – it’s a happy, relatively attainable medium between $1k and $50k. Plus, once you reach that first $10,000 and gain some confidence in your saving superpowers, the bigger numbers don’t seem too scary.
That said, if your savings are intended for a specific goal, you can always adjust the amount to fit your needs. For example, a good rule of thumb for emergency funds is to save at least six months’ worth of living expenses. That could be anywhere from $6k to $20k or more depending on your lifestyle and where you live.
2. Figure Out How Much You Can Save per Month
Next up, you need to pick an amount you can set aside each month. Your best bet is to take a look at your monthly budget and see where you can carve out some room (and if you don’t have a budget yet, take a moment to go back to the basics – a budget is a must).
Here’s the challenge: Don’t pick an amount you’re comfortable with.
That’s right – if you’re serious about reaching your first $10k, you need to give it your all. The amount you set aside each month should feel at least a little challenging. If you don’t feel at least a little sting from sacrificing something in pursuit of your savings, then turn up the volume on how much you’re saving.
3. Bump Your Savings Up Each Month
Once you’ve got your baseline number and tried it out for a few months, you’ll want to up the ante. Start off by increasing that number by 1% every month. For example, if you’re saving $200 at first, make that $202 next time, and $205 the next time. Yes, we know that should be $204.20, but when pennies are involved, always round up.
It may seem like a small change, but those percentages will add up over time and make a big difference in how fast you reach your goal.
This strategy doesn’t just apply to your savings, either. If you have a 401(k) account, increase your contributions to that, too. Wherever you’re socking away money, turn it up just a little more each month.
4. When Extra Money Comes Along, Save (Most of) It
Getting extra money is *chef’s kiss* amazing, and you know you deserve to treat yourself. Unexpected refunds, tax returns – whatever it is, you know the feeling when it happens.
We don’t want to kill that excitement, but we do want you to save most of that money.
Set a rule that you’ll always save 80% of any extra money you get. So if your side hustle brought in $500 this week, you’ll put away $400 of that and use the rest for fun.
You can apply this rule to all your non-regular income, whether that’s a tax return, stimulus check, side hustle, or gifts.
5. At Every Milestone, Challenge Yourself to Be Better
The grind never stops – when you meet your first goal, give yourself a high five and then figure out how you can do it better next time.
If it took you six months to hit $4k, set a new goal to save your next $4k in five months. Not sure what changes you need to get there? Get creative!
Fun fact: a recent study reported by NBC News found that “one in four Americans has a clutter problem, with the average home containing roughly 300,000 items.”
With all that stuff eating up your closet space, why not make an extra buck while also clearing out the clutter? With several platforms to choose from like Ebay, Facebook Marketplace, and LetGo, it’s never been easier to offload your junk.
6. Build a Plan
A goal without a plan is…not as good as a goal with a plan.
A plan can help you maintain focus and stay on track. Plus, there are tons of savings tools out there today to help you get started. With Lasso, you can build a customized plan right from your iPhone, and even connect with advisors to help you find new ways to improve your finances.
Ready to Reach Your First $10k?
You’ve got this in the bag – so don’t put off your financial goals any longer. Download Lasso today to start building a plan and connect with financial advisors.